World Markets Struggle on Merger Monday

Bikram Pandey
20 Dec, 2010
New York City

World markets traded sideways. U.S. indexes declined as the euro slid after Irish banks faced another round of downgrade and Asian markets declined on the rising tensions between Koreas. Merger Monday saw Qualcomm Inc agreed to sell its wireless spectrum for $1.93 billion to AT&T Inc.

[R]4:00 PM New York – World markets traded sideways. U.S. indexes declined as the euro slid after Irish banks faced another round of downgrade and Asian markets declined on the rising tensions between Koreas. Merger Monday saw Qualcomm Inc agreed to sell its wireless spectrum for $1.93 billion to AT&T Inc and Raytheon agreed to purchase Applied Signal Technology for $490 million.[/R]

U.S. indexes lost early gains in the afternoon as the euro slipped and the commodities wavered as global markets remained jittery. Rising tensions between Koreas dragged markets in Asia.

AT&T Inc agreed to acquire wireless spectrum from Qualcomm Inc for $1.93 billion. The lower 700 megahertz spectrum will help the second largest telecom carrier to improve services in congested areas and populated cities and offer a spectrum that covers 300 million people in the U.S. according to a statement by the company.

Sara Lee contemplated selling itself to Brazil-based JBS for more than $10 billion. eBay agreed to acquire Germany-based brands4friends for about $200 million. Australia based Perpetual ended takeover talks with KKR. EarthLink agreed to acquire the One Communications Corporation for $370 million and Applied Signal agreed to be acquired by Raytheon for $490 million.

Coca-Cola Enterprises expects pro forma revenue to be around $7.4 billion. Jefferies fourth quarter revenues surged to $695 million. Penn Virginia announced capital expenditures budget of $290 million in 2011.

The European indexes turned lower after euro-zone current account deficit narrowed in October and a rating agency downgraded Irish banks and debt securities. German producer price index rose. French leading index climbed. The OECD noted that Spain needs to improve government finances and job creation. Hungary unexpectedly hiked key rate.

European air and rail travel was disrupted for the third day in a row after hundreds of flights were canceled from airports in London, Frankfurt, Geneva, Brussels and Paris.

The UK indexes climbed after mortgage lending declined in November. Alberto Culver stockholders approved merger with Unilever. Ladbrokes proposed to buy 888 Holdings.

Tokyo stocks dropped the most in a month on a stronger yen against the euro damping outlook for exporters. Rising tensions in the Korean peninsula contributed to the market jitters. Crude steel production is expected to stay flat in 2011.

China key stock indexes drop on concerns of Korean tensions and rising debt crisis in Europe. Profits at state-owned enterprises surged 43% till November. Changsha Zoomlion Heavy Industry places priced its public offering in Hong Kong at the lower end of its price range.

Mumbai stocks gained in the evening aided by gains in automobile and technology stocks. Tata Chemicals agreed to acquire British Salt for ₤90 million. Indians now holds about 18,000 tons of gold, world’s 11% stocks according to World Gold Council.

EIH Limited received the regulatory approval for nearly $300 million rights issue. IDFC agreed to sell 25% stake to France based Natixis Asset Management. Tata Chemicals UK arm agreed to acquire UK based British Salt.

Stocks in Australia fell as the markets in the region declined after South Korea conducted live military exercises. Australian retailers face the bleakest holiday season as consumers seek deals overseas online. Australia released the much awaited broadband report. Crane Group, the building products company, rejects the hostile offer of Fletcher Building.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.311 and gained against the Japanese yen to 83.78. One UK pound fetched $1.55.

Crude oil increased $0.39 to $88.41 a barrel for a front month contract, natural gas edged higher 2 cents to $4.17 per mBtu and gasoline increased 4.6 cents to 236.40 cents.

Gold increased $6.80 in New York trading to close at $1,386.30 per ounce, silver increased $0.17 to $29.31 per ounce and copper for the front month delivery increased 4.60 cents to $4.20 per pound.

Yield on 10-year U.S. bond decreased to 3.32% and on 30-year U.S. bond yield fell to 4.43%.